(AOF) – In a bright red Parisian market, Capgemini (+ 1.60% to 158.45 euros) stands out for its good performance, its management having reassured about its activity during a dinner with analysts. “The dominant message was one of continued robust demand,” and demand “remains widespread across all industries and geographies,” Jefferies reports. The analyst confirmed his Buy recommendation on the IT consulting and services group.
Executives also saw no change in sales cycles or the nature of customer spending priorities. As for these, they have not switched from growth initiatives to cost savings.
“Management remains vigilant and aware of the likely impact of higher rates on certain futures clients/industries, but reaffirmed that with a much larger share of the portfolio sold today to the various corporate departments (sales , procurement, HR….) rather than IT, it expects to be resilient and repeated its expectation that 2023 will be another year of growth in all likelihood,” adds UBS. The broker remains Buy.
At the end of July, Capgemini had raised its growth target. Accenture’s competitor is now targeting growth at constant exchange rates between 14% and 15%, an operating margin of between 12.9% and 13.1%, and organic free cash flow generation above 1.7 billion euros.
“We believe that investors remain concerned about the ‘end of cycle’ characteristics of Capgemini and the IT services industry in general,” commented UBS. “However, as it showed during Covid, Capgemini has great flexibility in terms of costs and the rapid rebound in demand observed then reflects the greater importance than in the past of IT in the various lines of business”.
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